let the good times roll. they had a mini carnaval in rome right behind us in rome. it will all be different tomorrow. i'm shepard smith. here comes your world with neil cavuto. >> neil: thank you. tonight barack obama has choice, maggie or nicky or keep playing the same games on spending that have the capital more looking like walt disney. >> all it took a report out out of treasury of a surprising surplus to take the pressure off this president to cut spending this cold night in february. democrats quickly seizing on the data proof the deficits are getting better thanks to higher taxes. the president apparently says that his debt slashing is all

but done, he has come up with $4 trillion budget cuts and mission accomplished. it's over ten years and still leave us $35 trillion more bucks in debt over the same ten years. are we really saying it could have been worse? it could have been $9 trillion more, more or less. don't expect much cutting. because now is not the time to cut. you got to ask yourself, when is the time to cut? if the economy is too fragile to cut spending why is it perfectly fine to raise taxes? so revenue is good and less government bad? it's time to seized moment of spending right now but something tells me not this president and not now because it's clear that barack obama neither senses the urgency to cut spending nor the need and pelosi doesn't even see a spending problem. because now is not the time to

be cutting anything which i think says everything. he'll use the argue coming into office four years ago because we simply couldn't afford to do it then. six trillion in debt and four years later later. seriously, when is the right time to cut? when is the time to get serious. cuts are never easier. just as maggie thatcher, revolt of her own party when she to weather it and end up making history. >> no other party and reckless spending will stay with us. >> remember the boom that followed? the unprecedented boom that followed? for seizing such a moment, maggie thatcher became known as the iron lady. her likely punting big moment, barack obama has little to fear

he will ever be called the ironman. believe me, i hope i am wrong but art laffer i suspect i am not? >> it's the best monologue since johnny carson. >> neil: you are awful. >> are great. >> neil: finish your point. >> i love the spending cut idea. i don't think obama is going to do it but i remember thatcher did it. the reason we have a bad economy in large part is not in spite of it. >> neil: if it wasn't the ideal moment to cut in the midst of a recession four years ago and year later, it was dicey and year after that the recovery was still dicey, when is the right time to cut. maggie thatcher did it the midst of all environments, arguing

that longer term gains would more than justify acute short term pay? >> real serious thing, government spending is taxation, it really is. government doesn't create resources, it redistributes resources. when you should cut unnecessary spending is in the middle of a recession. i know people will tell you it's not true, but it is true. you can't tax an economy out of a recession. you just plain can't. >> neil: and i wanted to get with this into melissa francis into this, whether the first report out of the treasury indicates the whisperings of that. you can't hang your hat on tax hikes and can't be hoping and praying important another internet boom? >> you can't. you have to do a low rate tax and free trade and minimal regulations and get out of the

way. the economy will get it out of the sefgs. that is what it is supposed to do. governments aren't the job creators. they set the rules and set the stage and let the private sector handle it. it's unfortunately not what this guy is doing. i hope somewhere along the line we have a boom despite all these bad policies and we probably will, maybe not a boom but we will come out of it. that is despite of the policies but because of them. >> neil: great to see you. >> and it was a magnificent introduction. i loved it. >> neil: let the tax hikes roll in. there is a big reason why the budget numbers are looking good or at least better. crediting higher payroll and income tax revenues for the shocking improvement. payroll taxes, bringing in 9 billion dollars in january and

more taxes and more spending cuts. melissa francis and sandra smith. what do you think? >> i have a totally different interpretation the mainstream media flipped this. you saw it on the screen, this is because the payroll tax cuts expired. they noticed all these writers that their paycheck on january 1st was smaller than it was before. this doesn't have anything to do with the government. that money that disappeared in january, hey, look, there it is. the government has it. i think they are waking up to what is going on. >> neil: i hope you are right, i disagree with you. sandra, one could seize on this and whatever we are doing is working because things are beginning to chug along and deficits are coming down. we're only looking at $800 billion deficit? >> that is not the case. the media is touting that $3 billion surplus, we're on our

way. it has nothing to do with the fact that there were spending less in the month of january. in fact it wasn't because they were growing jobs and economy was actually improving. they were taxing those that were earning more, bottom line, neil it doesn't address how that is going to impact things going forward in the next few months. >> neil: you are going to say it have a growth effect? >> we saw consumer sentiment fall to the lowest level in january as people saw their pay checks shrink. retail sales, it's expected to grow only one-tenth of 1 percent. they shrunk to create the $3 billion surplus but we're not going to be spending and feeling heck a lot worse about the economy. >> neil: what is going around. dow is getting closer to all time record. up 48 points today. they must see the same thing that you report on fox business. either they see it and ignore it

or see it? >> they don't care what the government is doing. they are looking a what the fed is doing. that is what the stock market is all about. i don't buy it. i don't think they buy it. g.d.p. contracted in the fourth quarter. that was devastating news a short time ago. they are focused like a laser on ben bernanke and what he is doing. he has said he is targeting unemployment. they don't think it's going to go to 6%. he is going to continue to pump this easy money into the economy and keep interest rates low as long as unemployment doesn't drop too low. it pays to be in stock and bonds. that is what they are reacting to. what wall street is saying, unemployment isn't going down anytime soon. >> neil: what i worry about. we have the data on the left but

the excuse to not do anything. >> let's pace it the stock market has been cheering on bad news. more bad news on the economy, more stock market continues to go higher as melissa is saying, everybody is watching the fed. if things get worse they know they are going to step in and buy back more bonds and boost the stock market. >> neil: what if the president says nothing about spending resolve tonight. what if he continues, more initiatives and more ways to spend. is wall street used to that? >> there is still the threat of sequestration and we all get concerned and we see reality set in the stock market. everybody is starting to feel ancy how stocks and how high they are. >> neil: automatic spending cuts take place on march 1st, a lot of people think better than that tax hikes, we may go with that. >> actual real spending cuts in there, it's not when the

president talks about $1.7 trillion he is going to save, it has to do with budget caps that may or may not happen, spending caps that no one believes is going to happen. its reduction in interest payments when they say -- interest payments will be smaller. >> neil: but mission all but accomplished on this? >> he leaves the uncertainty on the table. markets don't like uncertainty. if bare still left with that doubt going up to march 1st, we will see it reflected in the stock market. >> i think everybody is focused on the short term and they see what is right in front of them. easy money. they see companies are okay and they think unemployment is going to stay high and everybody is focused what is in front of them. nobody cares about the cbo reported showing what is going to happen to the economy if we continue to have the huge debt. they don't care.

>> neil: ladies, thank you very much. in the meantime, i wanted you to alert coverage on fox business coverage, it starts at 8:00 p.m. we have powerful names there. you can see them but they are going to be going over what the impact of the president's speech and added dimension of marco rubio coming and speaking and then forget live market reaction across the globe as this is happening and the latest developments. you can go to any one of a number places, including this fine channel to get any one of those angles. you can come to fox business and get all of it on basic cable, for some of you. some of you don't have it. so you won't have it at all, but if you don't have it -- that is not really heartfelt. speaking out against big government, you heard what this

guy told us just yesterday. >> somebody has to be courageous enough to actually stand up to the bullies. >> neil: it's time to hear from marco rubio today. music: "make someone happy" music: "make someone happy" ♪it's so important to make someone happy.♪ it's so important to make meone happy.♪ ♪make just one someone happy ♪and you will be happy too.

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it's not the same atmosphere. different pressure on marco rubio, what do you think of that? >> its golden position to be in, neil. if you bomb completely, obviously it will hurt you. occasionally people giving that response to the state of the union it bombed. you have a great opportunity. my guess is, i haven't seen rubio's speech and i don't know whether he is going to deliver part of it in spanish. it's a great opportunity for him. he is at the top of presidential contenders in 2016. this gives him added important exposure. i think it will probably well-received but we'll see how he does. >> neil: graveyard is littered with republicans trying to seize that moment and trying to claim the stage. bobby jindal comes to mind and virginia governor mcdonald.

is it a comparison to the president united states whoever he is? >> you can't win in the setting in response to the state of the union. speech is written for you in vachx before anybody knows exactly what has said. it really isn't a response. it's a pre-written speech. >> neil: why can't they move on the fly. we do scripts on the fly if something dramatic happens. we change it and keep up with the news. i know what you are saying, but why do they do that? >> it's very good question. they have loaded the teleprompters. you could probably teach them. maybe they should go on the fly. it would be more interesting if they did to responding to the president. >> neil: i know who used to do it and two-man response to the

president. there is also different ways to do this. i wonder what would be wrong where somebody speaks or handles questions from the reporters just to stand out and be different regardless of the response tends to be tepid? >> you know, i've actually thought precisely the same thing. this is dangerous that we have some idea. you see i'm a lot hold older and you and i remember the jerry show, where jerry ford and everett dishing son in the senate. >> that is what i refer, i share your business come. why can't we do that? >> we could. it's perfectly possible to have an ex tell principal us on session with reporters but that means you may not get your talking points out.

we know how reporters can be at press conferences. >> neil: you are right about that. marco rubio, is there particular pressure because he more than anyone, "time magazine" calling republicans and touting him as a widely presidential candidate in 2016. is there extra pressure on him that he decides to go the other way and play it safe? >> he probably will play it safe to a certain degree and particularly because apparently his response is going to be bilingual to a certain degree. i think it will be in a good position to do well present sigh isly because we all understand, everyone through the years has finally gotten the message, that the responder to the state of the union doesn't have the stand and applause crowd, doesn't have the flag and doesn't have the house of representatives to use as a backdrop. therefore, it's not going to be the same thing.

you can't expect the same thing from the responder than the president standing there giving the state of the union address. >> neil: we will see tonight. always a pressure, the one bet still sticks in my craw but larry, thank you. >> neil: do you remember the ridicule this president got for this. where is the ridicule for this? [ male announcer ] at his current pace,

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>>. >> neil: all right, we are getting word of a fire-fight in los angeles involving that fugitive ex-cop christopher dorner. you might recall he is wanted for the murder of a police officer michael crane and attempted murder of three other

officers. what is going on in los angeles right now he is trapped and exchanging fire with california police authorities. we don't know much more than that. there is, indeed, a national manhunt for this guy. he has brought are vendetta who have crossed him, but they seem to have found dorner but we don't know for sure whether they've got dorner or can confirm that it is dorner. we do know there aggressive exchange of gunfire in los angeles. we don't know much more than that. when we do have more, we will, of course, keep you posted. >> other developments, in the meantime, just take a look what is going on with the repeat of history. i am sure you remember the ripping this president took for this. how about this president for this. president obama making the case

that his debt mission is accomplished. take a look at this and virginia governor, he is not sure this is won by anybody. if he is saying that he is close to spending cuts over ten years, is that bad? >> we don't know. i think you and your former guests larry hit a good point. yours was an excellent point. what is wrong with someone going on to make that -- you just heard that. this is what i think about that. one of the beautiful things about the person that is going to give the rebuttal, there is no rebuttal to the rebuttal. he can say anything he wants to his interpretation of speech. the real deal is this. the president has been the master of the bully-pulpit.

nobody argues that. he has been able to get things out and public has heard it. the republicans have not managed a mess edger to make a unified response. will it happe tonight? i don't know. >> neil: we do have to break away for developments in california. very quickly, i do want to get your thoughts on what is going on within the democratic party if the president is saying and nancy pelosi is saying, this whole debt cutting thing, we're done, that is not a focus anymore where moderates are saying not so fast? >> just saying accomplishes anything. you are absolutely right. if you look at the simpson-boles package that was supposed to be approached and yet people walk away from that. i'm very pleased we have found this person and i hope they got

the right person zbhn as do we. governor, it's a pleasure. i apologize again. law enforcement officials say they believe that they have that fugitive dorner in their sights. a firefight. trace gallagher is in los angeles right now with the very latest. what can you tell us. >> trace: this is very fluid. we can tell you big bear on highway 38 one of roads, main roads that goes off from big bear which we have seen several times going down towards southern california toward riverside. there are reports now, a couple different reports either a home invasion with a suspect that the "l.a. times" is in fact christopher dorner tied a woman up or a couple up and then stole their white ford truck or their white dodge truck and fled. then there were reports that fish and game authorities actually spotted that truck and that gunfire was exchanged. it's very unclear at this point

in time if anybody was hit in that exchange. we're listening to scanner traffic. the scanner traffic is somewhat confusing so we don't want to go there just yet. we do know they were chasing a suspect on foot. there were reports they might have had somebody in custody and they are backing off those reports. in the past 15-20 minutes we have been hearing this ongoing traffic about now authorities kind of converging on this one area on big bear mountain. those don't know the back story, for the past five days, thoughts have been just flooding that mountain trying to find christopher dorner who shot a young couple then shot three police officers killing one of them. they believe now says the "l.a. times" that they do have christopher dorner either on the run or he is blocked out or in some cases they are reporting he is already in custody. we're trying to find out through various sources. there is no confirmation from

any police authority. we are in contact with lapd and san bernardino's sheriff's office but there is christian dorner is cornered or at least has been spotted in the past 10-15 minutes. >> neil: the couple you talked about, tied up at a cabin and one was able to break away and make the call, do you know that? >> this is a couple. christopher dormer who put out a manifesto and the young couple, the woman was the daughter of the lawyer who actually defended christopher dorner a at this police board hearing that ultimately led him getting fired. her fiance was the other person that was murdered in your vine which is 30 miles away where the police officers actually shot about three days later. then when this manifesto went public, police started con verge

go because he named names. they started going out protecting all of these, quote, targets. that is when christopher dorner came one of those target, lapd pulled him over and opened fire on them. he then fled and 15 minutes later, that is when he shot and killed a riverside police officer, shot and wounded another police officer and then fled. now, we also know that subsequent to that he was seen in san diego trying to steal a boat. he couldn't steal it because the rope got caught around the propeller. he went to the boat saying he was going towards mexico and someone that found his wallet at the crossing between tijuana and san diego. then about nine hours later, when his truck was spotted in big bear, it was spotted at the home of one of the people who was named in his manifesto. that is the last time that christopher dorner or anything

about him was spotted until about 15 minutes ago. now, we're hearing that in fact, they've got, is in fact a shooting going on. we have our fox affiliate in los angeles en route with their helicopter. they should be arriving at any moment. we're going to try to switch over so we can get it on television because our window is up and bear with us. >> neil: absolutely. >> hold on for a second. >> we're talking to christopher dorner or the person that is believed to be the fugitive exchanging gunfire with authorities. law enforcement was speaking on this on condition of anonymity but another one reported that looking like christopher dorner. that doesn't mean it's necessarily christopher dorner, but they have very likelihood that it is. of course, this has been a

nearly week long what began and now a state and national manhunt for this former ex-cop who has a lot of weapons at his disposal. a lot of expertise and a lot of anger. trace gallagher back on from los angeles. this was almost unprecedented manhunt for this guy. they were following any and all leads. apparently it paid off today. >> trace: the big event in california history. they flooded big bear mountain with hundreds of officers and the genesis was this manifesto where he was naming 40 different police officers in or connected to the los angeles police department. so they had all these police officers being protected and then you have this massive force up on big bear which is maybe 120 miles east-northeast of

los angeles. they flooded with s.w.a.t. teams and officers and investigators and despite the fact that christopher dorner's truck was found burned out with weapons inside and footprints leading away from there they couldn't find him. couple on tha on shortly after he disappeared it begin snowing up there. you had s.w.a.t. teams and the entire air brigade had to be grounded. then you had the officers o searching on foot what amounted to be blizzard where they got 12 inches of snow up there. so any tracks were clearly covered up there. were out cabins, summer cabins that were in the back country at big bear. they tried to check as many as possible. some of them had been abandoned and vacant for years, quite frankly, there are hundreds of these summer cabins up there. it would be difficult to check all of them and go back and double check again. this area we're talking about

today, there are two main roads that go in and out of big bear. this is highway 38. it's one of the main roads that goes out of big bear. the reports we're getting is that apparently that christopher dorner who apparently got tired of waiting says the "l.a. times" and either carjacked or home invaded a couple and tied them up and stole their white dodge pickup. that is when fish and game authorities came in contact with him at that point in time and shootout begin. keep in mind as this situation goes on, we are getting reports that this is an ongoing shooting. you have fish and game, i'm quoting here, san bernardino police department sending a 12 man tactical team to the scene. there were two assault weapons, two assault rifles that were inside that car. it is believed he had handguns as well as assault rifles. it may be that we're dealing

with a suspect who is armed with only handguns or he may have other weapons at his disposal. we know throughout this ordeal he was heavily armed. he said in his manifesto he knows the tactics of the l.a. police department and he will use those tactics to gain his freedom and to gain revenge against them saying he wanted to create an asymmetrical war and would come at them with a different angle. today he got tired of hiding out and decided to make a break for it. that is when authorities came in contact with him. we are getting one of reporters is saying that again there is ongoing fight here. the police scan ser calling for reserves to come in. they are calling for an all hands on deck situation, neil, in this this enclave of the mountains of southern cal. they believe that they have

their man cornered or now involved in a firefight with christopher dorner who has been on the run for better part of nine days. >> neil: you mentioned asymmetrical war he claimed in his manifesto that involved 40-50 names. very angry. allegedly killed several folks. he didn't strike me as a person in the middle of this fire fight will go quietly into the night zbloolgt no, this is guy who said, i don't --. >> trace: no, this is a guy that said he would not see his name cleared. he feels he was wronged by the l.a. police department. he feels he was wrongly fired because he turned in a police officer for what he said was excessive force against someone that was being arrested. they had a hearing and they deemed he was lying. then he was fired.

he said he would not live to see his name cleared, but that he said, i'm quoting again here, that he would in fact seek revenge against the sheriffs or police officials who took away his life and his good name. saying he never had a chance to have a family and now he was going to take their family and first two victims, say police, the soften and the daughter rather and fiance of the man who defended christopher dorner during that hearing that ultimately led to him being fired. >> neil: trace, separate issue, they check the border thinking he may have fled there. obviously did not seem to be the case here. with reports now that some officers down, do we know for example if he is by himself or any hostages or anything like that? >> the reports we have heard so far, he is in fact by himself.

he stole this white dodge truck and he is by himself and heavily armed. the reports you are referring to about him fleeing to mexico that all transpired because there was a u.s. marble's report that he left his -- marshals report that he left his badge and wallet near the border. the boat he attempted to steal, he told the man a he could pick up in mexico. where his truck was found in big bear was a known associate of his. his parents own a home in big bear and the truck was found as the police were surveiling that home. it all ties together. they believe at some point, maybe he has an accomplice. when you fled with every resource and you still can't find this guy, plan "b", he had

some type of associate or accomplice to get him off the mountain. now, we know if these reports are true, that somehow he was able to evade police for these past several days. in our he has decided that he was going to make a run for it at first. if they have him cornered now he is willing to fight it out. we believe he is armed to do so. as to reports where you say there are officers down, we had heard a couple scanner reports. we hated to go with this. it's very fluid. we heard couple scanner reports of police officers down, not one but two times. we are tempering this with the fact that none of this has been confirmed. that is why we're going plodding along. we're awaiting, they are still flying to the scene. it should take them 10-12

minutes to actually get to the mountain so they can get a better idea what is going on. in a situation like this, you may have police waving off the helicopters so they don't give too much away. >> neil: i want to bring people up to speed. the biggest manhunt in california history, it seems to be coming to a fiery conclusion and potentially deadly one. christopher dorner is in in a gun battle with authorities. the outcome is unknown. we have a couple officers were down. we don't know the severity of their injuries. we do know that th shooting occurred after he burglarized a home in the area, tied up a couple stole their car. we're not immediately clear of the status of the couple or for that matter whether dorner was and is acting on his own, had

some help, but he is in fire fight. others have identified this scene as an active crime scene. and trace revealed law enforcement officials are swarming the area given the fact that this guy knows authorities their secrets and going after bad guys. he is up on their strategy and he is apparently loaded. we don't know how much weaponry we has but detective, former washington homicide detective joins us right now. detective, what is the best strategy in dealing with this guy right now? >> i can tell you exactly what the police are doing. they are setting up a perimeter. that is always what we do any time we confront a suspect in the manner they have confronted this guy. even if he is shooting at police. police will not return fire at

this point. we're going to allow him to continue to fire if that is what he is doing until we get the experts. they do have the e.r. t.unit en route. these guys are specially trained. once they get into position, then they are going to return fire. as long as we know we got this guy cornered, as long as the police have him cornered. that is where they are going to keep him at bay right now. we don't know how much weaponry he has, but at this point it doesn't matter. the main focus for the police is to keep this guy cornered, make sure there is no other individuals in the area that can be harmed and then at some point the response is going to be dramatic from the police department. >> neil: this is obviously a wooded area. when you talk about whether there are people in the immediate area, they don't know

whether he has anyone with him? >> that is one of the biggest challenges. i can tell you they are evacuating that entire, immediate area. we don't know if he has anybody hostage right now. we have to be careful. that is why the police will probably not return fire right now. the goal of the police is to keep themselves safe, keep this guy cordoned off and like i said when swat arrives and they will go in full steam ahead. >> is it your feeling given the prior violence and obviously the manhunt that has ensued for the better part of a week, this is guy who is not just going to quietly surrender? >> no, he is not going to quietly surrender. that is evident. i can tell you the police they know that. i have spoken to sources and they are all heavily armed because we anticipated this guy wanted to go out in a blaze.

if you notice that is why the police have never left the big bear area. we thought in the back of our minds he was somewhere in that area and it likes look he is still there. >> neil: they didn't given up in the big bear area. and he may have crossed the border down into mexico, they never took that seriously either did they? >> no, they didn't. as a matter of fact they did look at that, they've been in conversation with the department of homeland security, but never moved a major artillery away from the big bear mountain. >> we are back to the geography of this area. it presents its own set of problems? >> it does because you have a couple roads going in and out. they have blocked off that highway so there is nobody coming in or going. we have gotten word we're talking about deputies that have reportedly been shot.

there is now scanner traffic saying they want someone come in and get the wounded. we're now getting reports that there are possible wounded police officers and sheriff's deputies on the scene. remember, in the early going, we heard the shootout was between fish and game and christopher dorner. now, we have in fact police have confirmed to us that they do believe this activity does involve christopher dorner. again, we've got kttv, you can get a look and what they don't want is dorner to go back up in the mountains. the big fear he would try to lure them into some type of trap. they thought he had weapons. he said he wanted to kill numerous police officers. what they didn't want to do especially during the snowstorm was to try and send their authorities and officials into the jaws of evil and be

ambushed. two police officers that he shot in riverside, those police officers were ambushed. they were sitting, stopped at a red light and walked up to them and unloaded and shot both of them killing one. he is not adverse to ambushing police officers and he wanted to go out in a hail of gunfire. he is getting his wish right now. there are reports the fire fight is continuing. they are bringing more tactical units in from the los angeles county sheriff's department as well as the riverside county sheriff's department as well as local police on the scene that have been there for the better part of six days trying to find christopher dorner. they do believe this is the real deal. nobody is saying they don't believe this is dorner anymore, they think this is the guy. now it's a matter how it ends. does it end with dorner going in a hail of bullets. they believe he has struck a couple of sheriff's deputies. again we want to stress that is

unconfirmed, but they are calling for ambulances. they are calling for back-up and christopher dorner is still armed, unclear if he is barricaded, unclear if she backing up this entire shootout. as we get more information and as kttv gets closer, we'll get a better idea what is happening. right now they are just at the edge of mountains. they are not quite to big bear. they are crawling over, they are five minutes we're told from the chopper pilot. crawling over the mountains as you go into the local san bernardino mountains and you get toward big bear lake and we'll have a much better picture of police activity and what is going on. right now, the report and scanner traffic telling us this shootout is under way. that it does involve the man they have been looking now for nine days, christopher dorner,

who shot and killed a young couple, shot and wounded two police officers, shot and killed another police officer. this shootout is on. >> neil: we're also getting word that all schools, hospitals and public buildings in and around the area. from five to seven miles are in lockdown. this immediate area that dorner is supposedly holed up in is a collection of rental homes. again, the big bear area. and to trace's point they have already recovered a rifle, possibly a can of gas. the car that he had belonged to the people who he had held hostage earlier. he is without a vehicle of any sort and we don't know how much weaponry we he has with him and obviously enough to keep police

at bay? >> i understand the shooting has been going on. we don't know how many bullets he has actually fired and how many bullets authorities ever fired. how much weaponry does he have. we know he was carrying handguns. we know we left two assault rifles inside that burned out car. we also left camping gear inside the car. so the question was, if you are looking to survive in the mountains and looking for a shootout, why are would you leave two weapons in the car as well as your cold weather gear. that was unclear. we still don't have the answer. we may at some point in time. we do know he has apparently procured another weapon and he could be there for a while because we know he had another assault weapon we believe as well as handguns. so what he used to fire at these law enforcement authorities is unclear. the fact that he is firing at these law enforcement authorities is very clear. right now, we have a situation in big bear.

to give people reference as kttv is going up over the mountain to find out where it is. police presence and correspondents on the ground is massive. it's getting bigger and bigger. they are not about, if they can help it, make his way back up in the mountains and saturday the search all over again especially when you have more police officers who potentially have been wounded in this shootout. they want this to end. they want it to end now. >> neil: stay there if you can. chris dorner is surrounded. it's going to be hard for him to get away. pretty much, it's going to be his call from here on out. he has taken a couple officers down. severity of those injuries has trace has reported, we're going to try to get the latest from william at lapd headquarters. what can you tell us. >> reporter: we know that fish

and game has said that four to six of their wardens saw this white truck going down highway 38 from big bear, halfway between big bear lake and redlands, california. the wardens attempted to stop him in the white dodge truck. they had exchange of gunfire with california fish and game. no one was hurt in that initial volley of gunfire, however then, dorner bailed out of the vehicle. they got into a foot race. he headed into the woods. one of the local reporters was literally on the scene and over the air you could hear hundreds of shots being fired. the officers were telling him to get down in his car. a lot of profanity being used at the time. he was in the middle of it. you could hear a lot of gunfire between the officers and

detectives and sheriff's deputies and wardens and christopher dorner who had plenty of ammunition. two officers, deputies we're not sure exactly what agency they are affiliated with have been injured. we know at least one of them has been airlifted to a hospital. i might want to backtrack but we now know dorner basically broke into one of cabins and took the truck. what we're not sure exactly when that happened. whether or not it happened dating back to basically last thursday or friday or how long was he in the woods before he broke into this cabin. we know the search has been going on for a long time. we know a lot of officers said he didn't believe he was there any longer. they scaled the search 120 to 20 to 30 officers going through remote cabins. i'm assuming they knocked on a door and i'm told in this area

there are hundreds of cabins. maybe they hadn't come down this far on the mountain. i heard reports it was 10-15 miles from where his burned out truck was found. i'm talking about roughly this area around highway 38. it sounds like they do have christopher dorner on the run, in the woods somewhere around san bernardino national forest. >> neil: keep in mind, he is crazy or whatever you want to call him. he is apparently very crafty and avoided a pursuit in the past and gotten away a number of times before. we have heard that smoke degree naits niadz have been thrown in time to literally smoke him up. trace gallagher, do you know anything about that. >> trace: actually christopher dorner had smoke grenades, i can see our affiliate and going into

the cabins. the reason they are doing that, now we are getting reports that christopher dorner might have kind of withdrawn from this firefight and may be holed up in one of these cabins. really, if you look at this topography, he knows this area probably better than the police officers because he has been up there for the past five days kind of making his way around these mountains. they have surrounded now one cabin. we have gotten word of and now we are told they are setting up perimeters and bringing nor law enforcement officers in to figure out exactly when which one of these cabins he may be holed up this. for the time being and reports coming in from locals who are on the scene, for the time being, it appears the firefight has ended and back on the search for christopher dorner. we do know that two police officers as william was saying,

unclear if they are sheriff's deputies or police officers have been injured in some capacity. we believe they were hit with bullets. we do not know the severity of their wounds. we do know they are being taken to hospitals or at least one has been airlifted to a hospital. that is really the clearest picture we've gotten so far. this is kind of really small sample of the barricade. you have s.w.a.t. teams and law enforcement officers on the other side which would give you an indication wherever the fire fight was, it's not too far off the road. snow is about 14-16 inches. they had a little bit before so this is happening within the deep snow. you have officers and this may be what they are kind of surrounded. one of cabins that line up along the road as you go down. at least according to scanner traffic, it's unclear as to which one he might be in. the shooting has stopped. the police officers have set up

a perimeter. they are calling for more tactical units and calling for more police power on the scene. now, they are trying to figure out exactly which one of these out buildings or cabins he might be inside because he is heavily armed and if they can find out where she, they would waited him out as long as he doesn't decide to come out and started firing again. >> neil: thank you very much. you've got new developments from the lapd, what can you tell us? >> you know, the mayor antonio villaraigosa it's not just a question of if and when and the noose is tightening. we know from the manifesto he never intend to be taken alive. people thought he had a gunshot to the head and was dead. never, what i was going to say, it's a real problem for the task

force. as long as dorner was alive he could not take down his guard. he could not remove that protective shield around the lapd officers and family that this guy had h threatened. nor could they pull their people out of big bear just in case he surfaced. think of the political fallout of that. then, of course, you had the wider issue of just did he didn't show up for days or weeks. as expensive as it was, to keep one 24-hour shift staffed, that is equivalent of five full time polgsz. he was dedicated can thousand officers to chase this guy and man the task force phones what has amounted to thousand tips coming into the task force since the reward was posted of million dollars. it's now at $1.2 million but nevertheless has trace is

monitoring the affiliates, it sounds like like they have him surrounded and getting ready to make sure they have all the manpower and firepower to go in on him so no one else is injured. >> neil: that statewide national manhunt made his picture so recognizable photo in america. almost anywhere he woulding in that area, he would be instantly recognizable? >> that was definitely the kind of double-edged sword here because he was so well known, he couldn't show up at a gas station without being recognized. as you have seen from surveillance video, it's everywhere now whether you check into a motel or get gasoline, someone has your photo and just a question of finding you. also today, just to reiterate, police were on track. they said to residents in big bear just this morning, pleasing over your surveillance video,

your home surveillance video to see if you see this guy, maybe in a vehicle any time between last thursday and today. so as of earlier today, they didn't have any idea where he was and he turns upright under their nose right in the area they have been searching all along. >> neil: thank you very much. it's hard to believe this whole saga with six foot, 270 pound former policeman begin six days ago after authorities say, chris dorner took out captain's daughter and her fiance and released a manifesto that he first posted on fb. here is where it got interest ago for state officials, very intimidating and worrying that he was declaring a warfare on all of those individuals which left the state police to do something unprecedented. assign officers to guard the more 50 families connect